trademarks in Israel

Difference Between National Registration and International Registration of Trademarks

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National registration and international registration are two ways to protect trademarks around the world, and both have advantages and disadvantages.

Advantages of National Registration:

  1. Cost: National registration is typically less expensive than international registration, as it only involves the fees associated with filing and prosecuting the trademark application in a single country.
  2. Simplified Process: National registration processes are often simpler and quicker than international registration processes. This is because they are designed to be familiar to local applicants, and the national trademark office is more likely to have a better understanding of local laws and customs.
  3. Better Protection: National registration provides better protection in the country where the trademark is registered. National registrations are subject to local laws, which may be more favorable to trademark owners, and trademark owners may have more resources available to enforce their rights.

Disadvantages of National Registration:

  1. Limited Protection: National registration only protects trademarks in the country where they are registered. This means that a trademark owner would need to file separate applications in each country where they wish to have protection.
  2. Language and Cultural Barriers: National registration can be challenging in countries where the language and culture are unfamiliar to the trademark owner. This may make it difficult to navigate the registration process or to enforce trademark rights in that country.

Advantages of International Registration:

  1. Protection in Multiple Countries: International registration provides protection in multiple countries with a single application. This is particularly useful for businesses that operate or plan to operate in multiple countries.
  2. Simplified Process: The international registration process is designed to be simpler and quicker than filing separate applications in each country. The international application is filed with the World Intellectual Property Organization (WIPO), which acts as a central registry.
  3. Cost-Effective: International registration can be cost-effective for businesses that wish to protect their trademark in multiple countries. The fees for international registration are typically lower than the fees for filing separate applications in each country.

Disadvantages of International Registration:

  1. Limited Scope of Protection: International registration only covers countries that are signatories to the Madrid Protocol. This means that there may be countries where protection cannot be obtained through an international registration.
  2. More Complex Process: The international registration process can be more complex than national registration, as it involves complying with the requirements of multiple countries and working with different national trademark offices.
  3. Dependence on Home Registration: International registration is dependent on the home registration, meaning that if the home registration is cancelled or invalidated, the international registration may also be affected.

In conclusion, both national registration and international registration have advantages and disadvantages, and the decision of which system to use depends on the needs and circumstances of the trademark owner. National registration may be more appropriate for businesses that operate in a single country, while international registration may be more appropriate for businesses that operate in multiple countries. Ultimately, it is essential to work with experienced trademark attorneys to determine the best strategy for protecting trademarks around the world.

MEET US AT THE INTA 2023 SINGAPORE

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Dear Clients and Colleagues,

We are thrilled to announce that we will be attending the INTA 2023 Annual Convention in Singapore from May 16th until May 20th.

The event is the premier gathering of trademark professionals from all around the world and is an incredible opportunity for us to connect with colleagues, clients, and partners, and to stay up to date with the latest trends and developments in our field.

We are excited to share our knowledge and experience with other industry leaders, and to learn from the best in the business. We look forward to catching up with old acquaintances, meeting new friends, and building relationships that will continue to thrive for years to come.

In addition to the convention, Singapore is a fascinating and dynamic city with a lot to offer. We suggest taking some time to explore the following attractions:

  1. Gardens by the Bay – This stunning 101-hectare garden features more than a million plants from around the world, including towering SuperTrees and a world-famous Flower Dome.
  2. Marina Bay Sands – The iconic three-tower hotel features an observation deck with breathtaking views of the city skyline, as well as a casino, a shopping mall, and a range of restaurants.
  3. Sentosa Island – This tropical island resort is home to a wide range of attractions, including Universal Studios Singapore, a water park, beaches, golf courses, and more.
  4. Chinatown – A vibrant cultural district filled with colorful shops, street vendors, temples, and traditional architecture.
  5. Merlion Park – A must-visit for first-time visitors to Singapore, this iconic statue features the head of a lion and the body of a fish, and is a symbol of the city’s history as a fishing village.

We can’t wait to see you at the INTA 2023 Annual Convention and to explore all that Singapore has to offer. If you have any questions about the convention or the city, please don’t hesitate to contact us.

Best regards,

Yossi Sivan Law Firm 

combating counterfeit goods Israel

What Could be the Consequences of Not Registering a Trademark in Israel?

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Is it Possible for a Worldwide Fashion Label to Successfully Oppose a Similar Mark Without Holding a Trademark Registration? What Could be the Consequences of Not Registering a Trademark in Israel?

This is the case of a trademark opposition recently filed in Israel.

Facts of the Case:

Tasci S.r.l is the owner of the Montura brand, a fashion brand sold around the world under the mark shown below. Tasci S.r.l’s brand entered the Israeli market in 2017, but they did not file for a trademark. Tasci S.r.l does not operate a specific store in Israel.

José Guillermo Treger is the owner of a Panama fashion brand under the name MONTURA, designed as a logo shown below. José Guillermo filed a trademark application in Israel for the mark MONTURA in 2019 .

Tasci S.r.l opposed José Guillermo’s trademark application relying on its claim for reputation and sales in Israel.

José Guillermo has claimed that his mark is sufficiently different visually since both marks are using different styles. José Guillermo also claimed that his brand is intended for day-to-day fashion products, most of them under the age of 25, while the opposer’s mark is being used (out of Israel) mainly on sport and hiking clothes, which is a different category, therefore there should be no confusion.

The Trademark Commissioner’s Decision

The Trademark Commissioner has found that the marks are confusingly similar both visually and phonetically since the dominant feature of both marks is the word MONTURA.

Nevertheless, the Trademark Commissioner has ruled that the opposer was not able to prove his reputation in Israel, his evidence was vague and did not relate to substational  sales in Israel but only to general global sales, although several invoices (450 pages) were filed as evidence.    

Not Enough Evidence Filed

In addition, the Trademark Commissioner has ruled that the opposer was not able to prove that his mark considered a well-known mark since not enough evidence has been filed to support it.

Eventually, the opposition was entirely rejected, and the applicant’s mark was approved.

This outcome might be catastrophic for the opposer, who seems to have a considerable amount of global use around the world, but he couldn’t enforce his rights in Israel.

It should be noted that the opposer has filed a trademark application for his mark, but since the Trademark Commissioner has already ruled that both marks are confusingly similar, the applicant could file an opposition against the opposer’s new application.

What can Tasci S.r.l claim in their defence ? That there could be no confusion? They have already claimed that both marks are confusingly similar in the opposition previously filed by them!

This is why filing for a registered trademark in Israel is a must to ensure the protection of a brand. Relying on a global reputation to win a trademark opposition is extremely risky and sometimes ends not as expected.

If you are selling goods around the world, you must consider filing a trademark application in Israel. Don’t take any chances.

Disclaimer: The information contained in this article is for general informational purposes only and should not be considered legal advice or a substitute for consulting with a licensed attorney.

7 Ways to Potentially Lose Your Trademark in Israel

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Do you have a successful brand in Israel? To protect your brand in Israel from being overtaken by your competitors, it is important to take certain precautions. By following these tips, you can save both money and resources .

  • Failing to Register a Trademark

Failing to register a trademark for your brand on the Israeli market can put your business at risk for you to lose it to your competitors. They may claim rights to the mark, which could lead to a costly and time-consuming legal battle to prove your priority rights. Many businesses have lost their trademark because they did not register it in a timely manner. This can result in legal costs reaching hundreds of thousands of NIS.

Why should you register a trademark?

Registering a trademark for your logo or business name will provide you with exclusive rights to use it for a period of 10 years, and prevent competitors from using it in a way that misleads consumers or benefits from your reputation.

Additionally, having a registered trademark means you will not have to go through the costly and complex process of proving your reputation in court. In Israel, proving reputation of a brand may be considerable costly and complicated.

  • Not Using Your Trademark

If you have registered a trademark, it’s important to start using it immediately by selling your products and keeping records of transactions. Failure to use the mark for 3 consecutive years can result in losing the trademark to competitors who may register it as their own. Without proper precautions, the brand you have invested money, time, and energy in may fall into the hands of your competitors.

Important:

Failure to use the mark for 3 consecutive years can result in losing the trademark to competitors who may register it as their own

  • Avoid Genericizing Your Brand

There are instances where a brand becomes so closely associated with its product that the brand name becomes generic, such as “Tipp-Ex” which was the brand name of a German erasing fluid, but over time has become the generic term for all erasing fluids. Similarly, “Jeep” was originally a brand name for an off-road vehicle manufactured by Ford, but over time it has become synonymous with off-road vehicles in general. “Cargo” is another example in fashion, where it has become a generic term for mid-size pants. Another example is “ping pong”, which was originally a brand name owned by the Parker brothers, but has now become the name of the sport itself. “Fiberglass” is another example, it is a brand name owned by the Evans Kroning company, but has now become the nickname of the product itself.

When a brand becomes generic, it may no longer be eligible for trademark protection, leaving it open for use by competitors. Additionally, consumers may lose the connection between the brand and the manufacturer and fail to differentiate between the brand and the product category, not realizing that it is a private brand rather than a generic product name.

When a brand becomes generic, consumers may turn to competitors, mistakenly believing they are getting your product when it is actually from one of your competitors. This can result in the loss of the personality and uniqueness of your brand, and it can become part of the Hebrew language.

To protect your brand, it is important to avoid using your trademark as an adjective or noun. For example, if your new service is called SUPREEM for premium car sales services, avoid phrases like “Come and purchase the new SUPREEM vehicles” Instead, it’s recommended to use phrases like “Supreme offers a discount of up to 20% on luxury vehicle purchases.”

  • Failing to Renew the Trademark in a Timely Manner

When a trademark is registered, it grants exclusivity for a period of 10 years. At the end of this period, a renewal fee must be paid to obtain a renewal certificate. Failure to do so can result in losing the trademark permanently, and reinstating it would require costly legal proceedings, if possible.

To ensure that your trademark remains protected, it’s important to pay the renewal fee and apply for trademark renewal every 10 years, also known as trademark maintenance

  • Failing to Enforce your Trademark rights against infringers

If you fail to take action against competitors using your name or a similar name to deceive consumers, you may miss the opportunity to protect your rights and may face high costs. Furthermore, courts may be less likely to grant the desired level of protection if you have delayed in enforcing your trademark rights.

It’s crucial to remember that if you come across any unauthorized use of your brand or trademark, you should take immediate action to stop it.

  • Your Competitors might Cancel your Trademark

Your competitors may attempt to hinder your business by filing for cancellation of your trademark, whether it be for reasons such as registering in bad faith, not using the trademark for 3 years, or simply to limit your business. Should your trademark be cancelled, you will lose your exclusive rights to the mark, and your rights to it altogether.

What should you do? Make sure to retain a law firm that specializes in trademark maintenance. They will ensure that you are informed in a timely manner and take necessary steps to prevent mistakes that could put your brand at risk.

Ensure that your legal counsel safeguards your trademark and keeps you informed of any developments that could impact your brand. It is advisable to request an update at least annually.

Ensure that your legal counsel safeguards your trademark and keeps you informed of any developments that could impact your brand. It is advisable to request an update at least annually.

Important:

Ensure that your legal counsel safeguards your trademark and keeps you informed of any developments that could impact your brand

 

  • Avoid Permitting Others to Use your Trademark without a Written Agreement in Place

Allowing third parties to use your brand without obtaining the necessary permission, executing a written agreement, or registering the trademark in the trademark registry could lead to commercial conflicts. If not handled properly, these conflicts could have fatal consequences for the brand owners.

If you plan to grant others permission to use your brand or trademark, such as through franchise or distribution agreements, it’s important to have a written agreement in place outlining the terms and conditions, including monetary compensation, the start and end date of authorization, payment terms, and any required reporting. This should include a “license agreement” or “franchise agreement” that clearly defines the terms of the authorization.

Disclaimer: The information contained in this article is for general informational purposes only and should not be considered legal advice or a substitute for consulting with a licensed attorney.

Do you have any questions? Please contact us.

 

The Importance of a Word Mark Registration in Israel  

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Filing a trademark application for a word mark can be a powerful tool for businesses and organizations looking to protect their brand and intellectual property.

This article describes the Importance of a Word Mark Registration in Israel.   

A word mark is a type of trademark that consists of words, phrases, or slogans, rather than a design or symbol.

In contrast, a design mark is a type of trademark that consists of a design, symbol, or logo.

There are several reasons why businesses and organizations may choose to file a trademark application for a word mark rather than a design mark.

One major reason is that a word mark can be a more effective and efficient way to protect a brand.

A word mark allows businesses and organizations to protect their brand name and any associated slogans or phrases, which can be a key part of their brand identity.

This can help to prevent competitors from using similar brand names or slogans that could confuse consumers or dilute the strength of the original brand.

A perfect example can be learned from the recent case of the Israeli Trademark Office.

An applicant (shoe store) has filed a trademark application for the following designed mark in class 25:

 

The Trademark Examiner has refused the trademark application based on a similarity to a trademark registration for the word mark BUTTERFLY in class 25 owned by Tamasu Butterfly Europa GmbH:

 

BUTTERFLY

The applicant argued against the Examiner’s decision and requested a hearing before the Trademark Registrar.

The Trademark Registrar has reviewed the matter and rendered the following decision:

The test for the existence of a confusingly similarity is called the “triple test” and it includes the following tests:

  1. The visual and sound test
  2. The type of goods and marketing channels test
  3. The specific circumstances test

Regarding the visual and sound test, it has been determined more than once that the marks must be examined as a whole, but with emphasis on the dominant features of the marks.

According to the Registrar, the dominant element in both marks is the word BUTTERFLY, and the addition of the words SUPREME QUALITY will not prevent confusion since the words are transparent to the end consumer.

Furthermore, the word mark BUTTERFLY was determined to be strong enough in the fashion industry to protect against different types of designs and that the design features of the requested mark, such as the green color and BUTTERFLY drawing, may not prevent confusion.

Finally, the Trademark Registrar has decided to reject the requested application based on likelihood of confusion to the BUTTERFLY registration.

This is an excellent example of why word mark registration is crucial for brand owners, as it guarantees better brand protection.

A note: It may be counterproductive for an applicant who already uses a trademark to request a hearing before the Trademark Registrar to clear the way for registration, since a judicial decision showing a likelihood of confusion may be used to support a claim of infringement by the owner of the cited mark.

The risk of a potential infringement claim can sometimes be higher than the risk of not having a registration.

______________________________

Disclaimer: Nothing in the above shall be considered as legal opinion whatsoever. 

Can Basketball Stripes Pattern Be Registered as 3D Trademarks ?

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Israel, October 26, 2022.

Is it possible to register stripes pattern on basketball as 3D trademarks ? A recent decision of the Israeli Trademark Commissioner addressed this question.

KABUSHIKI KAISHA MOLTEN has filed a trademark application for stripes pattern on basketball in class 28 for basketballs and toys:

The trademark office refused the application for lack of distinctive character. 

According to the applicant, the requested pattern has acquired distinctive character through extensive market use, and is therefore eligible for registration.

The Applicant requested a hearing. 

The Trademark Commisioner, Dr. Ravia Israeli, was requested to decide whether stripes pattern on basketball eligible for registration as a 3D trademark.

The trademark commissioner ruled that the requested mark is a position mark, part of a product’s shape and design, therefore it bears a higher burden of proof.

The Trademark Commissioner has decided to follow the EU regulations regarding  position marks: 

“The factors to be taken into account when examining shape marks are also relevant for position marks. In particular, the examiner must consider whether the relevant consumer will be able to identify a sign that is different from the normal appearance of the products themselves. A further relevant consideration in dealing with position marks is whether the positioning of the mark upon the goods is likely to be understood as having a trade mark context.”

In other words, the consumer’s perception must be examined in relation to the design of the products in the relevant field, and whether the consumer will recognize the source of the goods when he notices the design that constitutes the requested mark.

The Applicant’s Stripe Pattern Lacks an Inherent Distinguishing Character

The trademark Commissioner has decided that the design of the applicant’s basketball is not unusual, unique or surprising in relation to designs in the field.

The design of the requested mark based on the pattern of the applicant’s stripes or the location of this design on the basketball does not constitute an independent element capable of directing the reasonable consumer in the field to the applicant. Therefore, it was decided that the mark lacks an inherent distinguishing character.

 Has the applicant’s stripe pattern acquired a distinctive character ?

As a general rule, when coming to decide on the question of the acquisition of a distinctive character, one must examine the period of use of the mark, the degree of publicity it received and the effort invested by the owner of the mark in establishing a relationship between the product and the manufacturer.

Volume of sales is not enough to necessarily create the required connection between the mark and the origin of the goods.

The applicant has submitted sufficient evidence to prove a substantial market share, but applicant has failed to demonstrate that the totality of the evidence shows that the pattern of stripes on the applicant’s balls has acquired a distinctive character and is identified with the applicant as the source of the goods.

“I did not find that the presentation of the image of the basketballs, which bear the applicant’s striped pattern, in the various publications, turns the design in question into a trademark of a distinctive nature eligible for registration.

On the products presented in the publications, the applicant’s name “Molten” appears next to its stripe pattern. Therefore, it cannot be determined that the stripe pattern without the accompanying name “Molten” next to it acquired a distinctive character …”


Therefore, the application for the stripes pattern as a three-dimensional mark ( 3D Trademark) (as a shape of a product) was denied.

At the same time, the requested mark in its two-dimensional form (the circle mark) is eligible for registration and will be recorded in the register with the addition of a disclaimer stating that this registration does not grant the applicant an exclusive right to the three-dimensional image of the ball and the pattern of stripes imprinted on it.

The meaning is that the stripes may be protected as a standalone trademark but not as a shape or design of a product.

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Disclaimer: Nothing in the above shall be considered as legal opinion whatsoever. 

 

 

Summary of 2021 Israel Trademark and Patent Office Report

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Check Out the Latest Trademark Filing Statistics in Israel 2016 – 2021

1.      National trademark applications (3%) and international applications (14%) both increased in 2021.

2.      A total of about 9% more applications have been filed this year than the previous year.

3.      The number of applications submitted this year (2021) is the highest ever.

4.     48% of all trademark applications filed in Israel were national applications filed by local attorneys, which means trademark attorneys from other countries still prefer to file their trademark applications using local attorneys after seeking advice and counsel from local attorneys.

5.      Approximately 75% of trademark applications filed each year in Israel are from foreign applicants, meaning most come from outside Israel.

Registration of a trademark in Israel is best secured by working with local attorneys.

 

The Fatal Result of a Trademark Infringement Claim

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“Rules Written in Blood” is an old Israeli saying that perfectly sums up the need to learn from others’ mistakes before choosing the right path.

As a brand owner or trademark lawyer, taking enforcement action if you see any competitors or others using confusingly similar marks is the first step to consider.

However, suing for trademark infringement can sometimes result in a fatal result for the brand. 

One example can be found here.

What is an Indirect Attack ?

In Israel, the defendant may raise several defenses to a trademark infringement claim.

Indirect attack is one of the defenses.

In an Indirect Attack, a defendant may claim that the plaintiff’s trademark registration is invalid, or shouldn’t have been registered in the first place, and therefore should be cancelled.

The plaintiff could request cancellation based on a lack of distinctive character or descriptiveness of the trademark registration (absolute grounds).

This could be a majore risk for the brand owner.

Court is Examining The Registrability of the Mark

In a recent case brought by a cosmetic company, this risk was perfectly illustrated.

An infringement claim has been filed to the Israeli Tel Aviv Magistrates Court, in which the Plaintiff has claimed that the use of the mark “Messeia” by the defendants on cosmetic products constitutes trademark infringement.

The Plaintiff owns the trademark registration for the mark “Messiah” in class 3.

Photos of the Plaintiffs products and the Defendants are presented below:

Plaintiff’s Products:

Defandnat’s Products:

It should be noted that an indirect attack could be generaly initiated in a trademark infringement procedure within the framework of the infringement claim itself, even if no separate motion for cancellation has been filed to the Israeli Trademark Office or no separate declarative motion has been filed. 

In this case, the Court has taken one step further, and although the defendant did not specifically raise the claim of indirect attack, the Tel Aviv Court first examined the registrability of the plaintiff’s trademark registration.  

Court Ruled that the Plaintiff’s Trademark Should be Cancelled

The Court has ruled that according to Paragraph 11 (7) to the Trademark Ordinance, marks identical with or similar to emblems of exclusively religious significance are not registerable.

The mark “Messiah” is protected as a symbol with a clear and exclusive religious meaning, meaningful in both Jewish and Christian religions, therefore the mark is not registrable.    

Thus, the Court ruled that the Plaintiff’s trademark registration for the mark Messeia should be cancelled.

In order to formally cancel the mark, the Court requested to send a copy of the decision to the Trademark Office.

So, the Plaintiff sued for trademark infringement, but ultimately lost his registration.

A fatal result for the brand owner.

Owners of brands should carefully consider their risks before initiating a trademark infringement claim, including losing their registration.

 

Disclaimer: The above may not be considered as any legal opinion whatsoever and users are requested to get a professional advise.

trademark refusals Israel

5 Tips on How to Overcome Trademark Refusals in Israel

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There are several types of refusals typicaly issued by the Israeli Trademark Office.

We have decided to share with you our 5 important tips on how to overcome a Trademark Refusal in Israel based on our extensive experience in Trademark prosecution.

This is a must read for every trademark attorney who files Trademarks in Israel. 

Beware of What You Write in Your Response – All Trademark Files in Israel are Public

Since 2015 all trademark files in Israel, covering most of the examination process of trademark applications, are public and can be viewed easily online by others.

It is very important to understand that any claim you claim to overcome any refusal may be held against the client, either by a certain competitor or by any other third party who can easily gain access to the online files. Make sure no confidential information is subbmited in your response.   

For example, if you agree to limit the protection of your application just to overcome a certain refusal your limitation can be used by any third party to block any claim of trademark infringement against him.

Your pleadings in the prosecution process might negatively affect your enforcement options. Therefore, we always recommend asking a local attorney to provide a short brief of the respond by bullet points in English.     

Do Not Respond Immediately to an Office Action – Wait and Consider All Options First

Our first instinct as trademark attorneys is to ask a local attorney to respond to an  office action before the deadline. It is very important to consider all options before you do so. Such option can be for example to wait until the other side has responded.

For example, once you receive a refusal (Office Action) in which your application cannot be registered based on similarity to other application that hasn’t been accepted yet, you might want to wait until the owner of the cited application has answered, to see his respond and then to decide on the proper course of action.

In that case you can wait until a few days before the deadline expires to review the other side’s response first. Reviewing the claims of the representatives for the cited application first, can provide you with material advantage in the process.

Ask the Local Attorney to Demonstrate the Use of the Mark using Online Information

In cases of lack of distinctive character refusals, trademark attorneys are confronting claims against the character of the mark. It is very important to show the examiners the actual use in the market using online information.  

In many cases we were able to prove that the mark is distinctive by showing the specific use in the market and how the specific use in the market acquires a special character to the mark. 

Use Foreign Registrations   

In cases of lack of distinctive character refusals, if your client has foreign registrations from his Country of Origin for the same mark and for the same list of goods, then you can use Section 16 of the Israeli Trademark Ordinance and request that the new application will be based on the foreign registration. By doing so you can efficiently overcome a lack of distinctive character refusal.

Ask the Local Attorney to Call the Examiner BEFORE Responding the Office Action

Experience shows that in many cases a quick chat with the Examiner can do miracles and can be even more efficient than an elaborated response.

We recommend in some of the cases to ask the local attorney to have a short chat with the Examiner, to understand his views and specifically ask him what you can provide in order to change his mind BEFORE submitting a detailed response.

While investing the time and energy in talking with the Examiner can be time consuming, it is very important to understand that if you fail to convince the Examiner, the second phase would be traveling to Jerusalem, attending the hearing and persuading the Trademark Registrar, this could be very costly for the client even before appealing the decision to the relevant District Court.                        

Yossi Sivan & Co. Law Office is specialized in Trademark Prosecution and litigation in Israel.

 

Contact Us

 

 

The above shall not be considered as any legal opinion whatsoever and we recommend consulting with a professional attorney.

      

 

  

 

   

New Israeli Supreme Court Decision on Trademark Infringement by Parallel import

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Is the act of parallel import beverages from Ukraine to Israel, without the consent of the Israeli trademark owner (who differs from the rights holder in Ukraine), considered trademark infringement? The Israeli Supreme Court, through a distinctive judgment by Judge Stein, tackled this query.

In simpler terms: In situations of split ownership, where different owners possess the same mark in different countries, does bringing identical products from Country A to Israel under the same mark, without the approval of the Israeli trademark holder, amount to trademark infringement?

The Facts:

Yafora Ltd produces and markets soft drinks in Israel. Yafora Ltd owns the “Schweppes” trademark in Israel and in the territory of the Palestinian Authority.

In 2006, Yafora acquired the trademark “Schweppes” in Israel from Cadbury Schweppes PLC. “Schweppes” beverages, marketed by Yafora Ltd in Israel, are manufactured by Yafora in Israel.

Ben Shlush Ltd imports various products from abroad into Israel in a parallel import process. Products imported by a Ben Shlush include food and beverages.

The parlell import scheme can be presented as follows: 

On March 12, 2019, Ben Shlush Ltd imported the first shipment of beverage bottles with the “Schweppes” trademark, which they allegedly purchased from Supreme Trading LLC.

This company purchased the beverages from official resellers, who purchased them from the beverage manufacturer in Ukraine, European Refreshments Limited. Coca-Cola owns the rights to the “Schweppes” trademark in Ukraine through its subsidiary ERL.

Ben Shlush received a cease-and-desist letter from Yafora on April 29, 2019, stating that the marketing of Ukrainian beverages under the “Schweppes” trademark infringes on Yafora’s Israeli trademark registration “Schweppes”.

In light of the above, Ben Shlush filed a motion for a declaratory judgment asking the District Court to declare that Schweppes’ beverages imported from Ukraine, which were purchased from ERL, were lawful and did not infringe on Yafora’s Israeli trademark “Schweppes”.

The District Court Decision: 

On October 19, 2020 the District Court has accepted the motion for a declaratory judgment and ruled that the fact that Yipora manufactures its products in Israel and does not import them to Israel from abroad does not deprive Ben Shlush of the status of a legitimate parallel importer.

In this context, it was pointed out that a certain difference between the products, those of the owner of the trademark rights and those imported in parallel import from another country, does not detract from their originality for the purpose of protecting the parallel import, whenever the product manufacturer holds the trademark rights in that country.

Along with this legal determination in principle, it was determined that Yafora in any case did not prove to the required extent its factual claim regarding the difference between the products.

Split Ownership of the Same Brand

The district court ruled that the legal doctrine concerning the exhaustion of intellectual property rights also applies in situations of territorial split ownership of trademark rights.

In this context, the district court has argued that the parallel import was a commercial risk that Yafora had to consider while acquiring the rights to the “Schweppes” trademark from Cadbury – in view of its awareness of the territorial, voluntary and agreed split of the Schweppes trademark rights.

The District Court ruled that this split of ownership was made when Cadbury sold its rights to various entities in different countries.

Accordingly, the District Court has awarded Ben Shlush with a declaratory judgment in which Ben Shlush is entitled to import the products purchased by ERL under the “Schweppes” trademark and that it is not considered to be a trademark infringement.

Yafora has filed an appeal to the Israeli Supreme Court.     

The Supreme Court Decision:

Judge Stein has decided to accept the appeal together with Judge Elron, against the minority opinion of Judge Hendle.     

Majority Opinion (Judge Stein)

The Court has ruled that the basic mistake that the district court made was to attribute a notion of internationality to the Israeli trademark “Schwepps” and its affiliation with the global “Schweppes” brand, which in fact does not exist. It is a fact that the trademark “Schweppes” is no longer associated with Cadbury, which at the time sold it to Yafora.  

Second, and this is the point: a trademark – “Schweppes” in this case, is limited to the borders of the state in which it is registered and gives its owners exclusive territorial rights, as opposed to extra-territorial rights unrelated to the local mark. Thus, the trademarks of “Schweppes” that have been registered and recognized in countries outside Israel are not relevant at all – this is because their scope is essentially limited to the borders of each country and its laws.

When Cadbury controlled 50 or 100 Schweppes trademarks in 50 or 100 different countries – even then it did not hold any international-global trademark, but fifty (or one hundred) different local trademarks, that were distinct from each other and unrelated to each other.

This basic principle will be hereinafter referred to as the principle of territorial protection for trademarks or, in short, the principle of territorial protection.

The principle of territorial protection and the exclusive right that Yipora has in the marketing and distribution of “Schweppes” products in Israel, lead the court to the following conclusion: Such importation shall violate Yafora’s exclusive trademark rights, will harm the ability of consumers in Israel who wish to buy Yafora’s Schweppes’ products, , and will lead to the erosion of Yafora’s incentive to invest in the quality of “Schweppes” products that are sold in Israel.

The Supreme Court then continued to define what is considered to be a legitimate Parallel Import in Israel:

Parallel import is a legitimate commercial practice whenever it respects and does not infringe on the existing trademark regime. Parallel or other imports that infringe the rights of the trademark owner in his own country are illegitimate and shall not be permitted.

In this case, in the absence of a contractual relationship between Yafora and the rights holder of the “Schweppes” trademark in Ukraine, there is no basis for claiming that the sale of the products by the Ukrainian manufacturer – between them and Yafora products – exhausts Yafora’s rights in Israel.

The Yafora company exercises its trademark rights only when it sells its own beverages under the “Schweppes” brand – and this, of course, only in relation to the beverages it has sold and received in return. These drinks – and only they – can be put up for further sale in Israel without infringing Yafora’s trademark. The Ukrainian brand bearing the “Schweppes” mark is not related to the Israeli brand which is identified with Yafora through the trademark “Schweppes” owns by Yafora. Therefore, the Ben Shlush “Schweppes” drinks imported to Israel are considered as infringing goods.

Minority Opinion

Judge Hendler presented a different opinion.

In his opinion the use of the mark “Schweppes” by Ben Shlush should be considered as “true use” of the mark in accordance with section 47 of the trademark ordinance. Judge Hendler contended that the use of the “Schweppes” mark on the bottles, even though they were produced by the rights holder in Ukraine and not in Israel, provides real and valuable information for the consumer about the brand.

In his opinion, the legally split of ownership did not change the reputation of the “Schweppes” brand in the eyes of the consumers. The Schweppes bottles enjoyed the reputation of “Schweppes” prior to the transfer of ownership, and the reputation of “Schweppes” continues to accompany them. This is therefore a true use of the “Schweppes” mark.

Judge Hendler continued and explain his opinion that marketing the imported bottles as ” Schweppes ” should considered as true use of that mark. The reason for this is not because in Ukraine the use of the mark was lawful, nor because the name of the rights holder in Ukraine (or his predecessor) was indeed “Schweppes”. The reason is that both the rights holder in Ukraine and Yafora both acquired rights in the same mark with an international reputation. In such a case the mark “Schweppes” on the imported bottles contains the correct information about the same brand.

In view of this conclusion, Judge Hendler continued to evaluate whether such import may cause confusion in the market. In his opinion, the consumers probably did not know that there are two ” Schweppes ” manufacturers operating in Israel that are not currently legally related to each other.

There is also no guarantee, in these circumstances, that the taste or composition of the imported beverages is the same as some of the beverages produced by Yafora, or that such an identity will be preserved in the future.

Although the back of the bottles contains data about the manufacturer, it is highly doubtful whether this caption allows the consumer to know effectively about the existence of two different and independent manufacturers who legally use the “Schweppes” mark.

In these circumstances, and since Yafora produces its beverages independently, it was decided by Judge Hendler that the marketing of the bottles as they are, eventually  does not meet the criteria of “true use”, in view of the likelihood of market confusion test.

Nevertheless, Judge Hendler believes that this difficulty can be overcome by affixing a “Disclaimer” sticker to the front of the imported bottles, in a prominent place and adjacent to the “Schweppes” trademark.

The sticker must make it clear enough that the drink is produced by the rights holder in Ukraine, and that the taste of the drink may be different from that produced in Israel by the trademark holder in Israel. Judge Hendler believed that such a disclaimer should overcome the confusion test.

Judge Stein objected to Judge Hendler’s view. In his opinion the Court should not provide legal guidance to the defendant. Judge Stein sees no reason to give Ben Shlush legal advice regarding its future operations in the Israeli soft drink market. In his opinion, giving such advice is not part of the judicial role.                

Conclusion:

The Supreme Court has decided to accept the appeal in accordance with the majority opinion of Judge Stein and Judge Elron who agreed with Judge Stein.

The Supreme Court decided to set aside the district court’s ruling and award a declaratory judgment which states that Ben Shlush is not allowed to import products made in Ukraine bearing the trademark “Schweppes” without the permission of Yafora.

The Supreme Court has also ordered Ben Shlush to pay Yafora legal expenses in both instances in the total amount of NIS 70,000.

This new decision materially limits the scope of legitimate parallel imports in Israel and define the legal ruling for a situation of a split ownership of same brand by unaffiliated companies in different countries.     

Our estimation is that an additional hearing will be requested by Ben Shlush since this decision could potentially have a major influence on the parallel import market in Israel.

Disclaimer: Nothing in the above constitutes any legal opinion whatsoever and the user is required to get a professional legal consultation.